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tv   [untitled]    May 8, 2012 6:30pm-7:00pm EDT

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integrati integration. >> you mentioned president elect francois hollande. it says here that he plans to meet with angela merkel, the german chancellor after the inauguration on may 15 to hash out opposing visions for the euro zone. why is it that the french and the germans seem to be on opposing enz of this discussion regarding their vision for the euro zone? >> traditionally france has always played the road of mid e middleman in europe, trying to mediate between the vision put forward by the germans and the more, you know, pragmatic vision put forward by some other european countries. under sarkozy, france had shifted gear. very much in line to the rigorous stance put forward by berlin. i think under hollande, we're
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going to see the expectation and the hope that there will be more emphasis on growth. and it's really the missing pillar in europe right now. you can enhance budgetary discipline for some country that's even a much meted stat but without putting any emphasis on growth prospects, there's really no way out. and president elect hollande is certainly expected to put more emphasis on this missing pillar so far. it's not the chance that as soon as he will be inauguratinged as president, he will be flying to berlin. and a few days later, he will become to the united states to attend the g-8 summit hosted by president barack obama at camp david. and that will also be very important international test that president hollande will be facing very soon in his presidency.
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>> we're talking about europe's challenge to austerity. independents 202-628-0205. if you're calling from outside the united states today, we hope that you will, 202-628-0184. as always, we'll be taking your tweets, looking at your e-mails and the conversation continues on facebook. our first call comes from spokane, washington. mary on our line for republicans. you're on "the washington journal." go ahead. >> ye >>. >> caller: yeah, here in the united states, we have the same issues you're having over there, but your countries always seem
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more on the ball to listen to the people. and i was wondering why -- i always suggested how come you guys go to the people and ask their opinion or like i suggested here in the state, there's a lot of people in the united states that are intelligent. they just can't physically work, but they have product ideas or business ideas that could make the country money. and if we had some kind of a competition with the people to come up with ideas to promote new business, new products in the country. then we're allowing the people to somewhat have a certain amount of say in their country so they don't feel so lost. at the same time, it will make a hero out of the people. and then at the same time, the
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presidente will be able to make himself or herself look good by listening to the people and what they suggest. >> this is certainly a real iss issue. if, you know, there might be problems here in the united states, this is really nothing compared to what's going on in europe. just to give you an example, 1 out of 3 young workers is unemployed in italy. the rate of unemployment in spain is roughly 25%. and clearly, you can't really have some decent long-term prospects when you have such a high unemployment rate. and this is really, you know, the challenge, how you can ensure a decent b future to this young work force while so many are out of a job. and that's really a structure
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issue because, you know, once this younger workers are outside of the work force for so long, this is going to have a hit on their long-term earning potenti potential. in a sense, the u.s. faces swlar problems, kbu on a much, much lower scale. >> our next call comes from michelle in woodbury, new jersey, on our line for independents. go ahead. >> caller: i have two comments and i would like to ask a question. our regional banks are owned by some european banks. and they're not accountable to the united states. also there is a move to make america, canada and mexico one region. my question is this. can you tell us what the central bank system is in europe and
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whether they are accountable? and is the idea of waging our lives in europe rather than having nations affect the people of europe? thank you. >> mr. lombardi? >> yeah, this is really about financial globalization. right now, you know, the caller was reminding us these financial flows do provide opportunities, but clearly sometimes also pose issues. european banks, you know, may well have stakes in u.s. banks, but it is also true the contrary that the u.s. banks clearly are very -- have a very international reach and therefore also, you know, u.s. banks do have stakes in a european and other banks elsewhere. that said, you know, regardless of whether it's a european bank having a stake here in the u.s.
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bank, the u.s. bank is still subject to u.s. laws and still subject to u.s. regulatory authorities. and in exchange for that, access the financing facilities by the u.s. federal reserve. of course, the same, you know, is true in europe for european bank banks that have u.s. banks. >> what did french voters vote against this weekend? what message were they trying to send to their government? >> i think the biggest frustration that characterized the french world this weekend is really president car cozy promised to modernize france. and yet very little action. very little was achieved under his presidency.
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yes, it's true the presidency was hijacked by the european crisis. in a recessionaire environment, that said, you know, there's the need for france to move forward. and car cozy didn't really pick up on that. the problem is to deliver a better future. he's successful in the project where, you know, it's about budget austerity. not just sort of reacting, the french government is being told. >> with regard to austerity and
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what the french government tried to do, what lessons can be learned by the u.s. government and in particular the obama administration regarding spending matters here in the united states and what the ramification of some kind of austerity plan might be further down the road for the united states? >> i think the european crisis does reveal a lot of lessons. first of all, among advanced economies, we've observed crikcs elsewhere. not really, you know in advanced economies or countries or regions that issue reserve currencies. such as the euro, for instance. so what we are seeing is that, you know, countries that do issue reserve currencies, strong currencies like the europe are being refused access to financial markets. and this is what is driving up the yields in europe.
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of course, the united states is the issuer of the reserve currency by definition. you see the u.s. fiscal situation in a way is much more worrisome than that of europe. in europe, you know, budget deficits are being brought under control. in any case, if you look at the euro area as a whole, the debt to gdp ratio is very modest. the gdp -- the debt to gdp ratio is also very modest. in contrast, if we look at the united states, the deficit is pretty sizable and so is the debt to gdp ratio. so the listen is, even if you're in very advanced dmi, you always have to be careful because, you now, crisis now days can strike
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really anywhere. >> lombardi is an expert on g-20 and g-8 summits, international monetary relations and global currency. his current projects focus on the international financial crisis and ongoing european crisis as well and the world bank. birmingham, alabama, gor dpon on the line for the republicans. you're on "the washington journal." gordon? >> caller: the basis for this whole thing is there's a massive entitlement program in greece, in italy. i mean, nay ear spending way too much money. so i don't understand how now everybody is, like, oh, we need to spend more money. you know? that's the problem. we haven't been spending enough.
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if i'm a german taxpayer, there's no way i want to give my money to greece, to italy, i mean, why should a german taxpayer want to give their money away in my opinion. >> mr. lombardi? >> i think the calmer does raise a very good point. so why germany after all should, you know, support this fiscally profligate countries of europe. first of all, germany does benefit from the single currency market. germany runs a credit account surpl surplus. it's more or less in line with china's. and of course, i guess where most of the german exports go, go to the rest of the euro area. these are a big export market. italy, spain, or other peripheral economies are big export markets for germany.
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on top of that, germany has benefited from the single currency. the single currency being sort of average of the very national currencies is now, you know, much lower. much more competitive. if the germans will still have the deutch mark. this really, you know, sort of is reflecting a sort of hidden subsidy for the german exports. and there, if germany were support under current conditions under policy adjustments, if germany were to support in a way the rest of the, you know, euro area, india will be pursuing its own self national interest. >> betty is on our line for independents. good morning, betty. >> caller: good morning. >> your question or comment? >> caller: well, basically i
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read about the le action from wall street and i was wondering what the average person would want to do in response to what's going on in the world. i know we're living in uncertain times, but some people are stocking up on things. some people are eyeing their gun racks. what would they have us do? >> there's an article in this morning's "usa today" that sort of addresses that. with the headline markets end mixed as investors take stock of europe elections. in it, they write investors on monday worried that the shifting political landscape in europe could undermine the region's long battle to keep its shared currency intact and restore the faith of global investors. your thoughts?
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>> there's no doubt that the euro area is going to go through a protracted period of no growth. maybe even a slight contraction, especially in some of its economies, like italy and spain. this year alone, italy and spain are forecasted to contract by about 2%. and some degree of contraction in the economies will also experience next year. and this is under the best scenario. so, you know, really the baseline scenario is that europe is not going to grow, not going to contribute to global growth in any way. but hopefully it's not going to detract from that. and, you know, the u.s. economy will be able to reinvigorate its economic growth. the european economy will be contracting by 2%.
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the u.s. economy will grow by 2%. and maybe 2.5% next year. so clearly the largest threat to the u.s. economy comes from europe. clearly if things were to unwind, then the u.s. economy would be hit spillovers coming through financial linkage, but this is really a scenario that the u.s. administration is very actively work on and trying to avoid. and this is certainly going to be the ma jor theme of the forthcoming g-8 summit that the white house will be hosting in camp david in two weeks from now. >> next up, covington, georgia. joe on the line for democrats. go ahead. >> caller: how you doing this morning? >> good. >> caller: >> our buildings are getting very old. if we moved from here to france,
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would they take it? give it a new name. there's the hague, the vatican, the kremlin, and we could call it the terd. i was wondering if you all might take it. >> irregardless of the last guard of that statement, would there be advantage in a shift in the focus away from the u.n. to organizations in europe? has the global economy worked in that kind of a direction? >> if anything, what we are seeing is that there is a major push towards strengthening international organizations. and what we have seen is the international monetary fund, located here in washington, was deemed almost to be irrelevant. you know, until a few years ago. and then international financial crisis struck and the imf
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regained prominence. also thanks to the support from its critical shareholder, the united states. and now we see that the imf is really at the corner stone of the international monetary system. they have made it clear that they're unable to solve the crisis. they also want the international community to prevent a serve approval under the advice of the imf along the way. so if anything, what we're seeing is yes, there is a trend towards building regional organizations. but these regional organizations are not in competition with international ones. and if anything, they try, you know, to work in tandem as a team towards issues that are
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really in a global threat. >> what can you expect based on the outcome of the elections in greece and france. >> the outcome of the election and the election of president hollande does create a little bit of uncertainty in a sense that hollande has never held anied a ministerial position. he has never held any public office. stakeholders, folcy makers from all over the world will be focussing on hollande's first steps. i think his attendance to the g-8 summit will be really an opportunity for his fellow
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leaders, from the u.s. and other nations to gain a get to know this better because right now essentially people in washington know about hollande, whatever is reported by the press. >> our next call from joshua on our line for republicans in jacksonville, florida. joshua, you are on the "washington journal." >> caller: thank you for taking my call. i just wanted to -- i just wanted to ask the question on what exactly is the socialist party in france party platform, and how does it differ from the socialist party or democratic party in the u.s.? >> i mean, we could say that hollande is really -- he comes from the socialist party but he is really a social democrat. so it's kind of centrist.
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also, clearly in his campaign, he also tried to please the most left wing groups of his own electorate. so what we can expect is that hollande will be moving more towards the center as he gains power and that said it will still be a continental european with a vision for a relatively strong role of the state, even if, of course, this were allowed to be somehow amended in light of the current events. in that sense, i believe it really -- this is where the difference with the u.s. democrats lie. where the democrats are more pro market. this has to be also a fair market. >> aurora, colorado. ann is on our line for independents. good morning, ann.
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>> caller: hi. good morning. i think what's missing in the discussion is what the financial sector, not only in the united states, but in europe participated in creating the problem of debt in europe. i worked for one of the large financial institutions in the u.s., and know what their derivative activity was. also how goldman sachs cooked the greek books to hide the debt, and in italy, there were issues with derivatives that contributed to the debt, and i think the discussion largely is omitting what problem is in the financial institution that drew this kind of crisis to the people who are actually having to shoulder the burden. even in the last hyperstimulus to greece where their debt was forgiven, investors were made
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whole by the european regulatory commission that allowed them to make their loss whole. it's so lopsided, even the discussion. n i'd appreciate your comments. thank you. >> domenico lombardi of brookings. >> this also brings me to the point, one of the previous callers was making. clearly, you know, greece and other southern economies were spending, but they were also being financed by a number of financial institutions located in germany. and in france. and, therefore, there is certainly the issue that the french and german banks, you know, should have been disciplined in a much more effective way than they have actually been. because the debt forgiveness, so-called private sector involvement, this is the defining jargon, came a little bit late in the game when
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essentially a number of private investors, financial institutions, had already sold their bonds. so there is certainly the need to try to get a fairer burden sharing. what we see right now is that workers in greece and in other peripheral economies are really taking most of the hit. >> next up is gainesville, texas. damian on our line for democrats. go ahead. >> caller: good morning. i'm not sure. maybe my question has already been answered but the previous caller said or alluded to the financial institutions as being a large part of the cause for the crisis in europe and in the u.s. also. so i guess the question i'd like to ask is, in developed
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countries, there's a big difference between countries in africa versus southern europe. you have high unemployment in africa, undeveloped countries. i understand that. but in developed countries where you have high unemployment, i'm wondering, are the social safety nets that are much more liberal in europe versus the u.s., are they in any way responsible for the higher unemployment rate? i mean, is the state safety net kind of making it easier for people not to work? thank you. >> it's not really the issue of social safety nets, per se, but more perhaps in the way they are framed in europe in some countries of continental europe where essentially both the structure of social safety nets but especially the restrictions on hiring and firing.
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puts the number in the labor market so that we absorb the relatively high unemployment rates that we were talking before. so the challenge is how you reform the social safety nets in a way that they actually provide a greater incentive for this unemployed workforce to be able to look and to find a job. clearly in this current of -- in this context of very uncertain times, you know, businessman is going to think twice and even ten times whether to hire worker if he or she is not sure that he can, you know, dismiss the worker should the economic conditions require that. of course, this is a very difficult choice. but the economic reality is what it is. and, therefore, you know, one has to really think hard in terms of -- foregoing some of
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the benefits, some of the privileges just to get a wider share of the population to work. >> we're talking about europe's challenge to austerity with domenico lombardi. we've got about another eight minutes. in "usa today" this morning under the headline what happens in europe affects the usa, they write, it's likely that europe's next steps will reduce the value of the euro. currently about $1.30 which will make european imports cheaper in the u.s. and american exports priceyer in the eurozone said a cornell university economist. a cheaper currency helps the eurozone countries try to grow their way out of debt. your thoughts about that? >> my colleague also from the brookings institution, certainly a point in noting that a
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depreciating euro might be certainly, you know, a contributing factor for europe to get out of the crisis. the euro is currently very high and as it was saying before, this partly reflected the fact the euro is an average currency. right? so it averages out the dutch mark and the greek drachma. for some countries it's too high, say for italy and spain. for other countries it will be low, say germany. so, clearly if you really want to offer, you know, some prospects to the peripheral economies -- otherwise, they cannot monitor monetary policy because it's being delegated to the european central bank. they have very little wiggle room in terms of fiscal policy because they will have to consolidate.
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so, i mean, what kind of growth policies they are going to introduce on top of a much-needed structure reforms in depreciating exchange rate may provide a much-needed boost for this southern economies. >> farmington, missouri. jay on our line for republicans. jay, you're on the "washington journal." go ahead. >> caller: yes, i lived over there for a while. >> over where? >> caller: in germany. and when the wall went down, you know, the people in germany used to say, why is it that we don't have money like you americans. and it's like, you don't work. you look to your government for everything. now you can go over into strasbourg and get drunk and get the load on but then french people look down their nose at you like you was nothing and they depend on the government for everything. i mean, everything. if you don't want to raise your child, take it to a church. the church will raise it. then they'll turn around and let the child go home but they'll put money in the child's pocket so that w